Factors to consider, in terms of inflationary pressure:
A. Rise in productivity, real wage growth and earnings
B. Changes in consumer expectations regarding pricing
C. Currency devaluation and fluctuations in money supply
D. Leveraged creation of wealth through asset bubbles
Improvements to underlying goods and services would be reflected in productivity and subsequent real wage growth. Earnings growth is non-existent outside the boardroom. (GDP is overstated?)
The other three factors, B, C and D are clearly in evidence. What Williams is saying is, with respect to CPI as a measure of inflation, the variance with economic reality is mostly likely a result of:
E. Bias introduced by changing reporting methodology
His explanations sounds fairly rational to me. What am I missing?
